Category: Employment Law

One question that managers often have is why they need to worry about documentation when terminating employees since everyone is an employee-at-will. The answer requires a short summary of employment law 101. Although employment in every state in the country other than Montana is employment-at-will, the answer lies in what most employees do once they have been terminated. First of all, what is employment-at-will? Employment-at-will means that you can hire or fire an employee for any reason or no reason at all. However, there is a little exception at the end of that sentence that states that this is so “as long as the reason is not unlawful”. Herein lies the problem. Many employees who have been terminated will claim that their termination was unlawful because it was discriminatory based upon their protected class. As everyone knows, under Title VII of the Civil Rights Acts of 1964 and 1991 there are only 5 protected classes, to wit, sex, color, race, national origin and religion. If President Obama has his way there may soon be a sixth which will be sexual orientation. But currently there are five protected classes under Title VII as well as age under the Age Discrimination in Employment Act, disability under the Americans with Disabilities Act, military status under USERRA and genetic information under the Genetic Information Nondiscrimination Act (“GINA”). In addition, each state usually has a larger number of protected classes than under federal law such as citizenship, marital status, sexual orientation, etc. So what most terminated employees do is claim that the reason they were terminated was discriminatory based upon one or more of these protected classes such as race, age, disability, etc.

How then can an employer protect its self against such claims? The answer is documentation. Document, Document, Document! So the employer must be prepared to show, prior to the termination of the employee, that the real reason for the termination was that this was a terrible employee with poor performance or that his attendance was abysmal. The best way for an employer to demonstrate this is with disciplinary warning letters stating that the employee is a poor performer or has terrible attendance. Courts have an expectation of fairness, meaning that if an employers is really terminating the employer for poor performance or attendance, the employer who terminates an employee should provide the employee with the reason that they are doing poorly and what they can do to improve. All of this should be in the disciplinary warning. The employer should then provide the employee with an opportunity to improve as well as with a warning that a failure to improve his/her performance will lead to further discipline, up to and including termination. If they fail to improve, provide another warning and another until it is clear that you have given the employee every opportunity to improve and they refuse to change. Then, when you terminate the employee, it will be clear to a court and/or jury who hears the discrimination case that yes, in fact, the employee’s performance and not discrimination was the actual motive for the termination.

So this is the reason that although employees are employees-at-will, employers still have to document the reasons that the employees are being terminated. It is necessary so that employers protect themselves from any future claims that the termination was, in fact, discriminatory.

A Ninth Circuit court of appeal has concluded that the overtime provisions of the Fair Labor Standards Act (“FLSA”) applies to a business located on an Indian reservation and owned by Indian tribal members. The court also ruled that the United States Department of Labor has the authority to enter the Indian reservation to inspect the books of that business for enforcement purposes.

The case, titled Solis v. Matheson, pitted the Department of Labor against a retail store known as Baby Zack’s Smoke Shop, located on trust land within the Puyallup Indian Reservation in the State of Washington.

The court acknowledged that Indian tribes generally operate under the legal shelter of “sovereign immunity.” The court wrote: “Indian tribes have a special status as sovereigns with limited powers. Indian tribes are dependent on, and subordinate to the federal government, yet retain powers of self government.”

Sovereign immunity is a bit of a misnomer, because tribes are not invulnerable to litigation. As the court wrote, “those powers may be limited, modified, or eliminated by Congress.”

Finding the FLSA to be a “statute of general applicability” designed to “achieve certain minimum labor standards with respect to industries engaged in commerce,” the court determined that Baby Zack’s Smoke Shop was regulated by the statute.

The court noted that some of the goods sold by Baby Zack’s have been shipped in from locations outside the State of Washington. Though located on tribal land and operated by a member of the tribe, “Baby Zack’s is a purely commercial enterprise engaged in interstate commerce selling out-of-state goods to non-Indians and employing non-Indians.”

Regulating this commercial enterprise, concluded the court, would not impinge upon matters of tribal self-government. The court added that the tribe had not enacted comparable labor laws, nor did it contend that such laws would preempt federal law.

Although law in the area of Indian sovereign immunity has been slow to evolve in relation to the rapid growth of tribal commercial enterprises, the Ninth Circuit’s decision can be characterized as part of a trend towards regulating labor relations of Indian tribes, particularly where the rights of a non-Indian workforce are at stake.

In 2007, as reported in our Legal Update here (page 2), in 2007 a court found that the National Labor Relations Act (NLRA) applied to an Indian tribe operating a casino. (San Manuel Indian Bingo and Casino v. National Labor Relations Board (D.C. Circuit, February 9, 2007).

The Ninth Circuit in Matheson also noted cases where courts had applied federal labor laws to Indian tribes, including cases where OSHA applied to a tribal farm employing non-Indians and ERISA applied to an Indian-owned saw mill. There are also a number of reported cases where courts have declined to apply federal labor laws to Indian tribal matters.

It is reasonable to expect labor law litigation against Indian tribes to increase, and, further, that the U.S. Supreme Court will sooner or later offer clarification due to conflicting lower court rulings.

The Genetic Information Nondiscrimination Act (“GINA”), which becomes effective on November 21, 2009 prohibits employers from acquiring genetic information about its employees, with certain exceptions. (Follow this link for a summary: Summary of GINA.)

The law will require employers to change their current practices regarding the acquisition of medical information. Practices that have been permissible under the ADA will no longer be permissible on account of GINA. The EEOC’s recently published proposed regulations make this challenge apparent.

GINA includes a broad definition of “genetic information.” It includes not only the results of genetic testing, but also information regarding the manifestation of disease in family members. Family medical histories are often found in medical records. It is lawful, under the ADA, to acquire medical information regarding employees, post-hire. Such information may also be acquired in the context of the reasonable accommodation process, or a fitness for duty process.

The EEOC’s proposed regulations state that genetic information inadvertently obtained as part of an ADA accommodation does not violate GINA. “An individual provides genetic information as part of documentation to support a request for reasonable accommodation under Federal, State, or local law, as long as the covered entity’s request for such documentation is lawful.”

Unless the information is truly provided inadvertently, the employer will violate GINA. According to commentary for proposed regulations, an employer “that asks for family medical history or other genetic information as part of an inquiry or medical examination related to an applicant’s or employee’s manifested disease, disorder, or pathological condition will not be considered to have acquired such information inadvertently.”

GINA and the proposed regulations will prohibit practices previously allowed under the ADA. The comments to the proposed regulations state: “Thus, even though the ADA allows an employer to require a medical examination of all employees to whom it has offered a particular job, for example, to determine whether they have heart disease that would affect their ability to perform a physically demanding job, GINA would prohibit inquiries about family medical history of heart disease as part of such an examination. Such a limitation will not affect an employer’s ability to use a post-offer medical examination for the limited purpose of determining an applicant’s current ability to perform a job.”

The commentary continues: “[Employers] should ensure that any medical inquiries they make or any medical examinations they require are modified so as to comply with the requirements of GINA. In particular, we note that at present, the ADA permits employers to obtain medical information, including genetic information, from post-offer job applicants. As we interpret GINA, this will change on the November 21, 2009 effective date of Title II of GINA: Employers no longer will be permitted to obtain any genetic information, including family medical history, from post-offer applicants. Employers will likewise be prohibited from obtaining this type of information through any type of medical examination required of employees for the purpose of determining continuing fitness for duty.”

The comment period for the EEOC’s proposed regulations ends on May 21, 2009. The proposed regulations can be found at this link: EEOC Proposed GINA Regulations

Employers’ obligations under COBRA have been significantly increased by the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA is commonly known as the economic stimulus legislation recently passed by Congress and signed by President Obama.

In a nutshell, ARRA entitles employees terminated between September 1, 2008 and December 31, 2009 to continue health care coverage through COBRA by paying only 35 percent of their premiums for up to nine months. The remaining 65% is paid by employers, who may deduct the cost from federal payroll taxes. Employers must immediately comply with the law by providing notice to eligible individuals, collecting 35% of the premiums from the employees, paying 65%, and filing quarterly tax returns claiming a credit for the 65% subsidized amount.

ARRA mandates that plans notify certain current and former participants and beneficiaries about the premium reduction. Employers should send notices to employees who are involuntarily terminated between September 1, 2008 and December 31, 2009.

The Department created model notices to help plans and individuals comply with these requirements. Each model notice is designed for a particular group of qualified beneficiaries and contains information to help satisfy ARRA’s notice provisions. The forms were posted on the DOL website on March 19, 2009.

Employers are scrambling to understand and implement the COBRA provisions in the American Recovery and Reinvestment Act of 2009 (ARRA). ARRA is commonly known as the economic stimulus legislation recently passed by Congress and signed by President Obama.

In a nutshell, ARRA entitles employees involuntarily terminated between September 1, 2008 and December 31, 2009 to continue health care coverage through COBRA by paying only 35 percent of their premiums for up to nine months. The remaining 65% is paid by employers, who may deduct the cost from federal payroll taxes. Employers must immediately comply with the law by providing notice to eligible individuals, collecting 35% of the premiums from the employees, paying 65%, and filing quarterly tax returns claiming a credit for the 65% subsidized amount. See my summary here.

Question: Under “regular” COBRA, a reduction in hours such that the employee loses eligibility for benefits will trigger COBRA. What about ARRA? If a company reduces an employee’s hours to part time, must (or may) the employer offer the ARRA premium subsidy?

The text of ARRA specifies that the premium is paid as a result of an “involuntary termination.” A reduction in hours is not a termination, and therefore it would seem that ARRA does not apply.

I called a representative at the Department of Labor’s Employee Benefits Security Administration, and he stated that ARRA would not apply in such circumstances.

Certainly it would be nice if the government put this interpretation in writing. So far as I know, to date this has not happened.

Question: What if the employee quits after receiving a reduction in hours. Does she then qualify for ARRA?

Again, the ARRA premium subsidy applies where there has been an involuntary termination. Resigning would not seem to be an involuntary termination. The same EBSA representative referenced above opined that in such circumstances, ARRA would not apply. Again, no official written interpretation has been published at this time.

While I would agree with the EBSA representative, I also think about state unemployment benefits. Although in California, for example, one is generally disqualified from receiving benefits in the event of a resignation, there are exceptions where the employee had no choice but to quit (e.g., illegal treatment in the workplace, and other such unforgivable sins). So far, I am not aware of any similarly broad interpretation of the phrase “involuntary termination” when it comes to ARRA.

One of the major employment law changes that is likely to come about early in the Obama Administration is the passage of the Employment Non-Discrimination Act. This bill would amend Title VII to prohibit discrimination based upon sexual orientation. Prior versions of this bill included gender identity as well as sexual orientation. However, the current version of the bill know as HR 3685 that was introduced by Representative Frank only includes sexual orientation as a protected class.

Title VII currently does not include sexual orientation a protected class. However, President Obama has indicated that he would like the law to prohibit both sexual orientation as well as gender identity discrimination. Whether gender identity is ultimately included will be something to watch for. Although federal law does not currently include sexual orientation or gender identity as a protected class, many state laws do provide that sexual orientation, gender identity or both are protected classes. Currently, there are 13 states and Washington, D.C. that protect against both sexual orientation and gender identity. These states are California, Colorado,Connecticut, Iowa, Illinois, Maine, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont and Washington. In addition there are currently 7 states that protect against sexual orientation but not gender identity. These states are Hawaii, Maryland, Massachusetts, Nevade, New Hampshire, New York and Wisconsin.
For employers located in a state where neither sexual orientation nor gender identity are currently protected classes under state law, how will this new federal law affect your company? An employer would need, at the very least, to do the following:

• Amend their EEO Policy to add sexual orientation as a protected class; and

• Amend their Anti-Harassment Policy to add sexual orientation as a protected class; and

• provide training for their managers and employees so that they understand what sexual orientation discrimination and harassment look like to help to prevent it.

Even if ENDA does not include gender identity as a protected class, a recent landmark case has added some protection for those who claim discrimination and/or harassment based upon gender identity. In the case of Schroer v. Billington, David Schroer applied for a position and was hired by the US Library of Congress. Mr. Schroer met with his boss prior to the commencement of employment. At this meeting he told his soon to be boss that he would be “transitioning” to a female and would be a female when he started the job. He told his soon to be boss that his name would be Diane Schroer on his first day of employment and that he would look like a woman. The very next day Mr. Schroer received a telephone call advising him that the Library of Congress was rescinding the offer of employment because he was “not a good fit for the position”.

Diane Schroer commenced a lawsuit under Title VII against the Library of Congress claiming that the decision to revoke the offer of employment was discrimination based on sex under Title VII. Remember that Title VII does not yet and did not when she brought this lawsuit prohibit discrimination based on gender identity. However, Diane Schroer’s attorney claimed that by rescinding the offer based upon Diane’s transitioning to look like a woman, the Library of Congress had discriminated against her based on her sex.
This was a landmark decision because the Library of Congress had alleged at trial in federal district court in Washington, D.C. that it had no liability because transgender people are not covered under Title VII. However, the Court held that the decision to rescind the offer after learning of the employee’s decision to transition from a male to a female, essentially changing genders, was discrimination based upon “sex” under Title VII.

Of course this won’t be an issue if ENDA ultimately prohibits discrimination based upon gender identity as well as sexual orientation. However, if ENDA limits the prohibition to sexual orientation then this is an important landmark decision because it creates precedent that transgender employees might be protected from gender identity discrimination and/or harassment by Title VII in its current version based on Title VII’s prohibition on sex and gender discrimination and harassment.

As the unemployment rate in California increased to 9.3% statewide in December 2008, the state agency responsible for administering unemployment benefits, the Economic Development Department (EDD) is overwhelmed. It has a significant case backlog and has drained the unemployment insurance fund.

As reported in the L.A. Times, “the state is paying out $30 million to $34 million a day in benefits. During the week of Jan. 5, its balance fell from about $500 million to $270 million.”

In December, reports the Times, California issued $1.1 billion in assistance checks to 429,000 claimants. Unemployed workers are eligible for payments of as much as $450 a week for up to 59 weeks.

According to the EDD, the UI Fund is projected to be in a deficit of $2.4 billion by the end of 2009. The UI Fund is projected to be in a deficit of $4.9 billion by the end of 2010 if changes are not made to the financing structure. The governor and legislature have been discussing increasing employers’ payroll tax contributions. This of course would not be good news for businesses already hit hard by the recession.

When the fund is depleted, the state will be forced to turn to the federal government for loans.

Meanwhile the EDD is overwhelmed by the volume of claims. “Millions of calls to state unemployment insurance processing centers continue to go unanswered,” reports the L.A. Times. “A 30-year-old computer system is overloaded, and stressed clerks are swamped by backlogged applications.”

The backlog is becoming a crisis, reports the L.A. Times. “Although the Unemployment Insurance Appeals Board is supposed to decide within 30 days whether the state wrongly denied an individual’s jobless benefits, less than 4% of complaints are finished by then, the U.S. Department of Labor says.”

In all, a record 68,135 appeals filed by out-of-work people and employers were awaiting action by the board as of Jan. 23.

“California takes longer to resolve unemployment appeals than any other state except Virginia, according to Labor Department data, and the federal government has demanded that the state come up with a plan to fix the mess this month.”

Governor Schwarzenegger’s plan to require state workers to take a two day work furlough each month is expected to exacerbate the problem.

Despite the backlog, employers should continue to promptly review employee claims to determine whether an application should be challenged, and if necessary, an award appealed. An employer has the right to appeal EDD’s decision to pay a claimant. An appeal must be submitted within 20 calendar days of the mailing date of the EDD’s Notice of Determination and/or Ruling.

The Department of Industrial Relations’ Division of Occupational Safety and Health (DIR/DOSH) has issued a press release reminding California employers to post at their place of business a summary of work-related injuries and illnesses during 2008.

The Form 300A requires employers to report the number of injuries each year, even if no work-related injuries occurred. Vital information must also include the nature of the injury or illness that the employee suffered, the severity of the work-related incidents and the number of days the employee missed work due to the injury.

The deadline is upon us. According to Cal/OSHA, the summary must be displayed in a visible area from Feb. 1 through April 30 for employee review. The posting period helps improve safety, according to state officials. “The summary is designed to create safety awareness in the workplace for employers and employees so similar injuries can be prevented in the future,” notes DIR Director John. C Duncan

Which employers must post Form 300a? Employers with 11 or more employees, except those covered in the California low-hazard establishments in the retail, services, finance and real estate sectors. For information about whether your company is an excepted establishment, follow this link to the Cal/OSHA website: List of exempt establishments.

Covered employers must display the totals from the Summary of Work-Related Injuries and Illnesses (CAL/OSHA form 300A) wherever employee notices are usually posted. Cal/OSHA also requires employers to mail or provide the annual summary to employees who do not report at least weekly to a location where the annual summary for their workplace is posted.
If there is more than one business establishment, a separate log and summary must be posted in each physical location that is expected to be in operation for one year or longer.

We’ve all had the unenviable task of doing it. We’ve all had to go ahead and bite the bullet and “get ‘er done”. We’ve probably all had to take a moment to ourselves to regain our composure after we’re done doing it. But is there ever a GOOD way of making it happen? Is there a more efficient way of doing it while decreasing the chance of drama?

What am I talking about, you ask?

TERMINATIONS!!!! ***Que the high-pitched screams of horror***

It’s almost natural for a person to want to defend himself when he is confronted with some type of misconduct that causes for his employment to be terminated. Especially when the misconduct is not “gross” in nature (assault, theft, violence, work-refusal, etc.). So do you allow for the employee to state his case even when you know that the decision is final? If so, how long do you allow for it to happen without it turning into a remake of “The Great Debators”?

One thing I was taught by my old boss (I like to refer to her as the Yoda of HR) was that if you find that it’s been over 5 mins and you are STILL TALKING during a termination, you probably are going to end up saying something that you will regret (aka something that the termed employee can use against the company to dispute the termination). You know, something like “I’m so sorry” or “I wish this didn’t happen to you” or “I wish it was someone other than you”. So as a rule, it’s best to keep things within a 5 minute time limit in order to void out any opportunity for something out of line being said.

So with all of that said, how do you balance keeping things short and sweet while also making sure that the termed employee doesn’t feel like the company poured salt into his wound by treating him like a total stranger who hasn’t been working for the company for “umpteen” years?

So please do me a favor and let me know some of your experiences when it came to terminating an employee? Is there a GOOD way to do it? What kinds of methods have you used and how well did they work (or not work)?

The Cheesecake Factory, Inc. learned this the hard way when they were recently sued by the EEOC for failing to respond to complaints by male Cheesecake Factory workers that they were being harassed by other male co-workers. The complaint in this class action alleges that the male workers were continuously harassed since 2004 by other male employees. The EEOC contends that groups of male employees would sexually assault other male employees and some would grab the male workers crotch area and also go behind them and “grind” up against them as if simulating a sexual act. The male employees complained to management at the restaurant but management ignored the complaints and allegedly did nothing. The EEOC attorney for the plaintiffs stated that “[a]ll employees, both men and women, have a right to work in a harassment free workplace”.

The lesson for employers is clear. When employees complain about harassment the law requires the employer to take action to eliminate the harassment and ensure that the workplace is harassment free. The employer must commence an investigation and communicate the results of that investigation to the complainant and the accused. The employer must then take “prompt corrective action”. Such action can include disciplining the harassers, up to and including, termination. Depending on the severity of the harassment, prompt corrective action could simply involve a written disciplinary warning. It really depends on the facts and circumstances of that individual case. What is most important is that the employer take prompt action that successfully stops the harassment.

This is true whether the harassment is between members of the opposite sex or the same sex. In 1998, the US Supreme Court in the case of Oncale vs. Sundowner Offshore Services held that members of the same sex who harass each other are engaging in sexual harassment and that sexual harassment does not have to occur between members of the opposite sex. So employers should be careful to not ignore complaints of sexual harassment even if they occur between same-sex employees. Always take complaints of sexual harassment seriously and act immediately to eliminate any possible harassment in your workplace.

Before I jump right into it, let me go ahead and paint a picture for you:

It is 8am on a Monday morning and traffic was non-existent (Did everyone take the bus?), the drivers that were on the road gave you the right of way each and every time (Do these people owe me money or something?), the birds are singing your favorite song (my personal favorite is Rainbow Connection by the Carpenters.), and the sun is shining so bright that you swear its smiling like the sun on the front of those old Raisin Bran cereal boxes. You have a certain amount of guarded optimism because things are so quiet and peaceful. Well by now it is 11am and you start to think that this Monday may not be so manic after all. All of your employees are working like a well-oiled machine and there arent any blazing infernos that need to be put out.

Just as you start to relax, you receive a phone call from one of your departmental managers stating that an unknown employee has put an Anti-Abortion poster up on the break room wall. Well you might say to yourself, It is just one poster. I will just go ahead and have it taken down and not make a big deal (aka ORDEAL) out of it. Well that may work in the short run. But what if someone already saw that poster and decided that it was their moral duty to go and place some Pro-Choice posters up when he/she comes in the next day? Or what if you had an employee who because of personal experience, saw the Anti-Abortion poster and became offended by its content prompting them to notify an outside organization? Would just taking down the poster be enough? Would doing that cause for that drizzle to turn into a storm?

In my humble opinion, I always make sure to be swift and definite in my actions when it comes to these kinds of things. I would do the following:

—-Write up a memo reminding all employees of the companys Posting Policy and the impending disciplinary actions that could result from a
violation of the policy. I would post up copies of the memo in common areas like the break room, restroom door, time-clock, etc.

—-Depending on the contents of the posting and its severity, I would also consider having a staff meeting to verbally notify all employees about the
Posting Policy as well. Again, this may not be necessary. It would strictly be a judgment call on my part.

—-I would notify all managers of the incident and advise them to keep a look out for any employees who feel the need to express themselves by
posting things on company property.

—-I would make sure to become even more visible in order to send a silent message that HR is watching. This doesnt have to be done
blatantly. This could be accomplished by simply walking around and speaking to employees about their day or the kind of work that they are
doing.

All in all, I really feel as if it is a lot more beneficial to be proactive as opposed to reactive. Communication with employees is key. Again, this can be done by written communication and/or verbal communication. If communication has been established and an employee still violates the policy, he/she cannot say that he/she was not aware or notified of the policy and the consequences of violating it.

In closing, it is always important to let employees know that freedom of speech is not absolute when it comes to the workplace. In other words, the workplace is no place for everyone to express their moral, religious, racial, or personal beliefs. In addition, it is also imperative that we make sure that employees feel like they can come to a place where they do not have to worry about being ambushed by someones beliefs or expressions. As an HR professional, it is crucial that we nip a potentially volatile situation in the bud before it goes from a little light rain to something similar to a tropical storm. Being concise and decisive in your actions will go a long way towards taking care of an isolated incident before it becomes a company-wide situation.

As always, this is an open forum for discussion. Please feel free to comment with your own professional experiences and how they were handled. Would you have done anything differently? How did your employees react to your actions? As far as my opinion on things is concerned, do you agree or disagree? Let me know what you think or what you’ve done when faced with this particular situation.

The Department of Labor has published a new form for use in connection with “qualified exigency” leave under the FMLA’s recently added military family leave.

By way of background, on January 28, 2008, President Bush signed into law H.R. 4986, the National Defense Authorization Act for FY 2008 (NDAA).

The NDAA amends the FMLA in two ways. First, it allows an employee to take up to 26 workweeks of leave to care for certain family members in the military who suffer a serious injury or illness in the line of duty.

Second, the NDAA permits an employee to take up to 12 weeks of FMLA leave for “any qualifying exigency arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation.” The family member must be a member of the National Guard or Reserves (not regular military).

Recently published regulations define “qualified exigency” to include the following:

The U.S. Department of Labor’s Wage and Hour Division (WHD) announced in a January 2, 2009 press release its enforcement data for Fiscal Year (FY) 2008. In FY 2008, WHD recouped back wages totaling $185,287,827 for 228,645 workers.

WHD touted this statistic as a “40 percent increase over the FY 2001 figure.” The press release notes: “Since FY 2001, WHD has recouped more than $1.4 billion back wages for over two million workers.”

However, WHD has been the subject of recent criticism, and in its press release WHD failed to note that the 2008 figures represent a decrease from 2007. In FY 2007, WHD collected $220,613,703 for 341,624 workers. (Link to 2007 stats.)

Alexander J. Passantino, acting administrator for the Wage and Hour Division, offers the statistics in support of his request for additional funds to increase enforcement measures. “These continued strong enforcement results demonstrate that our comprehensive approach is working. We also urge Congress to provide the funds we have requested in the president’s FY 09 budget to hire additional investigators.”

President-elect Obama is likely to fulfill Passantino’s wishes, although Passantino will probably not be around to see it happen. In July 2008, responding to a Government Accountability Office report , Senator Obama sent a letter to Secretary of Labor Elaine Chao, expressing concerns that the Department of Labor is not fulfilling its mission to prevent and remedy violations of federal minimum wage and overtime laws. In his letter, he was critical of Mr. Passantino’s testimony before a Senate committee.

“GAO’s conclusions about how the Department exercises its responsibilities to working Americans raise serious, but addressable, issues. Fixing these problems may require bipartisan cooperation, or in some cases additional funding, but other needed reforms are in the sole discretion of the Department, and can be instituted unilaterally.”

In December 2008, President-elect Obama named Democratic Rep. Hilda Solis of California to serve as labor secretary.

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) reports that it continued to exceed enforcement goals during Fiscal Year (FY) 2008. In its press release, the agency reports that its emphasis on identifying and eliminating serious safety and health hazards has resulted in an unprecedented 80 percent of all violations issued being in the most serious categories.

Among the DOL’s statistics:

87,697. Number of logged violations of OSHA standards and regulations for worker safety and health in 2008.

67,052. Number of 2008 OSHA violations cited as “serious.”

12. Number of criminal referrals for wrongdoing under the Occupational Safety and Health Act made in 2008.

38,515. Number of OSHA worksite inspections in 2008, surpassing the agency’s goal for the year by 2.4 percent. On average, 4,000 more workplace inspections were completed each year (38,515) between FY 2001-2008 as compared to the prior administration FY 1993-2000 (34,508).

3,800. Number of worksites targeted by the DOL for unannounced comprehensive safety inspections.

“Workplace inspections and issuing citations are a critical part of OSHA’s balanced approach to improving workplace safety, but the real test of success is saving lives and preventing injuries,” said acting Assistant Secretary of Labor for OSHA Thomas M. Stohler in the December 19, 2008 press release. “According to preliminary numbers for 2007, the workplace fatality rate has declined 14 percent since 2001, and since 2002, the workplace injury and illness rate has dropped 21 percent - with both at all time lows. This year’s inspection numbers show that the strategic approach used by OSHA - targeting highest hazard workplaces for aggressive enforcement while also using education, training, and cooperative programs to improve overall compliance - can help achieve significant reductions in workplace injuries, illnesses and fatalities.”

During these tough economic times, as employees fall into debt, employers may see an increase in wage garnishments. Can an employer terminate an employee if the wage garnishments become a nuisance?

The answer is: “It depends.” Federal law, as well as California law, protects employees from termination on account of garnishment for “one indebtedness.” An employer is not restrained from taking adverse action against an employee on account of garnishment for more than one indebtedness.

<u>Federal Law</u>

In the federal Consumer Credit Protection Act, found in Title 15 of the U.S. Code, section 1674 prohibits an employer from discharging any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness. A willful violation of the section may result in criminal penalties, including a fine of up to $1,000, or imprisonment of up to one year, or both.

Although the federal act provides a criminal sanction as the only penalty for violation of the prohibition, some federal courts, including in the 9th Circuit have interpreted the law to allow an employee to file a civil lawsuit seeking back pay.

The term “one indebtedness” refers to a single debt, regardless of the number of levies made or the number of proceedings brought for its collection. A distinction is thus made between a single debt and the garnishment proceedings brought to collect it. A creditor, in seeking to collect a debt, may garnish wages on multiple occasions. Yet because the creditor seeks to collect a single debt, the employee would be protected by the federal law.

According to legislative commentary, if several creditors combine their debts in a single garnishment action, the joint amount is considered as “one indebtedness.” In the same vein, if a creditor joins several debts in a court action and obtains a judgment and writ of garnishment, the judgment would be considered a single indebtedness for purposes of this law. Also, the protection against discharge is renewed with each employment, since the new employer has not been a garnishee with respect to that employee.

<u>California Law</u>

The California Labor Code provides similar protection to employees. Section 2929 provides: “No employer may discharge any employee by reason of the fact that the garnishment of his wages has been threatened. No employer may discharge any employee by reason of the fact that his wages have been subjected to garnishment for the payment of one judgment.”

An employee discharged in violation of California Labor Code Section 2929 may continue to collect wages for up to 30 days after the date of termination.

California law is thus more explicit than federal law with respect to a private right of recovery. The legislative commentary associated with Section 2929 states that the civil penalty is intended to aid in the enforcement of the prohibition against discharge for garnishment of earnings provided by the federal Consumer Credit Protection Act of 1968. The civil penalty under Section 2929 benefits employees, notes the commentary, by providing a more effective method of securing compliance than the criminal sanction provided by the federal law.

Excessive garnishments may subject an employee to discipline. The legislative commentary observes: “Some employers have a rule that the employee will be given warnings for the first two garnishments and will be discharged for the third garnishment in a year. Where at least two of the actions relate to separate debts, discharge would not be prohibited by the law since the warning and discharge would be based on garnishment for more than one indebtedness.”

Employers should thus exercise caution before taking adverse action against an employee whose wages have been garnished.